Welcome!

The New Market Model in AustriaUNECE Gas Centre Task Force on Gas Markets Regulation

Brussels, 11 December 2012

“The oil & gas company TSO”

Gas &PowerActivities

ITO Gas ITO Gas Connect =

MAM

ITO BOG 51%

ISO TAG GmbH 11%

SSO OGSAInternational

LogisticsCEGH EconGasEconGas

Petrom GasPetrom Gas

TradingTrading Power

17.12.2012 Task Force on Gas Markets Regulation3

Group Strategy in short: integrated equity gas marketer

- Growth guided by E&P equity gas availability – supported by portfolio optimization- Infrastructure investment supports group integration and enables equity gas monetization

Apart from ITO`s legal obligations

Group Strategy in short: integrated equity gas marketer

- Growth guided by E&P equity gas availability – supported by portfolio optimization- Infrastructure investment supports group integration and enables equity gas monetization

Apart from ITO`s legal obligations

R&M

OMV Group 2011: EBIT EUR Mm 2,500; Employees: 30,500

E&P

The new Austrian market model

17.12.2012 Task Force on Gas Markets Regulation4

What happens (hopefully) on January 1st?

− Joint Market areas for transport instead of point-to-point transports and control area transports (=domestic)

− Additional system administrators in the transmission system

− Third party access:

− Entry-Exit instead of point-to-point

− Back-pack principle for final customers still “applicable” (up to the VTP)

− Balance groups also in the transmission system – unbalanced nomination

− Changes to the tariff system – regulator’s cost added to transit;

− Exit from transmission area being paid by consumer collective

− SSOs paying their share

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Why does it matter?

ST. PÖLTEN

WIENLI N Z

S A LZ B U RG

GRA ZI N N S B RU CK

BREGENZEI S EN S T A D T

KLA GEN FU RT

VTP

NCG

Slovenia

Hungary

PSV

SlovakiaAustria is an important transitcountry

− Transit: domestic = 4 :1

− Transit capability 100 Bcm

− Domestic consumption8.6 bcm 2011

Germany

Italy Croatia

17.12.2012 Task Force on Gas Markets Regulation6

Market areas and system administrators

Market area EastMarket areaTyrol

Market areaVorarlberg

MAM = GCA new

BGC

DAM

VTP new = CEGH

NO (1-n) TSOs + DSOs

storage production

NO (1-n)

BGR (1-n)

BGC

DAM

NO (1-n)

BGR (1-n)

BGC = AGCS

DAM = AGGM

BGR (1-n) partlynew in transit

BGC: Balance group coordinator

DAM: Distribution area manager

NO: Network Operator

BGR: Balance group representative

VTP: Virtual trading point

MAM: Market area manager

17.12.2012 Task Force on Gas Markets Regulation7

Relationships

Distribution

Transmission

StoragePro-

ductionEnd consumer

Virtual Connection / Trading

Phys. Connections between Network Operators

MAM

DAM BGC

VTPEntry/Exit

TSO1

TSOn

DSO1

DSOn

17.12.2012 Task Force on Gas Markets Regulation8

Gas Connect Austria as Market Area Manager

− Duties of the MAM according to the Gas Act 2011 :

Capacity Calculation Model �

Organisation of Online Capacity Platform [WIP 1/4/2013]

Nomination Management [WIP – 1/1/2013]

Balancing [WIP – 1/1/2013]

Balance Group Management �

Market Area Management [WIP – 1/1/2013]

Network Development Plan �

Coordination Maintenance �

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Registration / One-Stop-Shop

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Example: One-Stop-Shop− Balance group representatives / Registration procedure

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20

11

23

11

1

4

10

12

1

3

1

0

5

10

15

20

25

S H

ExitStor InSale

EntryStor OutPurchaseProductionBiogas

BG h

Measured valueof consumption

Schedule

BG d BG Bio

Measured valueof production

Market area overall

Distribution area

VGM

debit credit

OperatorVTP

BG border traffic

Measuredvalue

Schedule

BKO

MAM

BioEK FP

BG grid

Schedule

ProductionStorage

Gasexchange

Market Model:Balancing Mechanisms

Measured valueof consumption

Schedule ScheduleMeasured

value

debit debit debit debitcredit credit credit credit

Source: AGCS

Result per hourResult per hour Daily statementDaily statement

Daily statementDaily statement

BG with MGMBG with MGM

BG with BKO BG with BKO BG with BKOBG with BKO

Exchange price + 4 EUR/MWh

Avg. price (stock exchange/MOL)

*0,9/*1,2 EUR/MWh

Min./max. price recall

Nom. outNom. out Nom. inNom. in

ConsumptionConsumptionNom.

purchaseNom.

purchase ConsumptionConsumptionNom.

purchaseNom.

purchase

ImportExport

Nom. supplyfor

final consumers

industry

Gas exchangeGas exchange

MT (activetrading)

MGM (automatic balancing)

VGM(activetrading)

Nom. supply for final consumers SLP

MOL Merit Order List

MOL Merit Order List

AE

price

h

AE

price

d

Auction

ROD

Day

Ahead

MOL

Flow

ROD

l

Auction

ROD

DAY

AHEAD

RUDU

MOL

Market Model : Balancing Energy Mechanisms -Pricing/Sourcing

Source: AGCS

Comparison of P2P and en/ex productsP2P products

Satisfied customersEn/ex products

Satisfied customers?

Only point-to-point (P2P) transport reservations

Flexible entry/exit reservations into/out of the market area� Entry reservation �transportation to VTP� Exit reservation �transportation from VTP

Title transfer exclusively at cross-border interconnection points

Title transfer exclusively at the VTP

Rigid contract-based capacity use Flexible capacity use, via (several) balance groups

Bespoke service� Firm� Interruptible

Standardised service� Firm

� Freely allocable capacity� Dynamically allocable capacity

� Interruptible (classes)

Business hours � 24/7 Business hours � regulated

Allocation mechanism � FCFS Allocation mechanism � auction

Distance-based charging� Transportation charges based on P2P distance

Tariffs determined by decree� System utilisation charge set for each en/ex point

17.12.2012 Task Force on Gas Markets Regulation14

Capacity Sales

GCA taking new approaches to marketing �

− Automated en/ex marketing on FCFS basis from 1 Jan. 2013 onwards (OCB®+)

− Participation in the European Platform Initiative �− Standardised marketing tool at European level, due for launch on

1 April 2013

− Capacity marketing by means of auctions in accordance with the CAM Network Code

− Option of marketing “bundled capacity” at cross-border interconnection points

− Development costs shared with participating TSOs

− Active role in designing the future customer portal

� Maximisation of customer satisfaction

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Contract changes

Transformation under section 170(6) Natural Gas Act 2011�

− Existing transportation contracts amended

− Separate capacity reservations at en/ex points in lieu of booked P2P capacity

− System users required to pay rates established by order at these points

− Amendments do not entitle parties to terminate contracts

− Transition will as far as possible be automated following a customer information drive

� Legal limits to TSOs’ freedom and customer focus

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© 2012GAS CONNECT AUSTRIA GmbH

floridotowerFloridsdorfer Hauptstraße 11210 Wien, Vienna, AustriaT +43 1 27500-88000

www.gasconnect.at

Goodbye.

Back-up slides

17.12.2012 Task Force on Gas Markets Regulation18

List of abbreviations

Abbreviation Meaning

BG Balance group

BGC Balance group coordinator

BGR Balance group representative

DAM Distribution area manager

DSO Distribution system operator

ENTSOG European network of tranmission system operato rs for gas

GTC General terms and conditions

MAM Market area manager

NO Network Operator

TSO Transmission system operator

TYNDP Ten year network development plan

VTO Virtual trading point operator

VTP Virtual trading point

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